Canadian Consulting Engineer

Public Works heal thyself! Audit points to poor contract management

July 6, 2007
By Canadian Consulting Engineer

The federal government department responsible for procuring 90% of the Canadian government's goods and services -- ...

The federal government department responsible for procuring 90% of the Canadian government’s goods and services — including consulting engineering services — has been embarrassed by a situation with one of its own contractors.
An internal audit by Public Works and Government Services Canada found problems in its contract with A.T. Kearney Ltd., a global management consultant hired to help PWGSC carry out its “Way Forward” program. Ironically, the “Way Forward” program is intended to improve the government’s own procurement practices and make them more efficient and streamlined.
The audit dated May 18, 2007 and covering the period November 2005 to October 2006, found that $19.8 million of a $24 million contract with management consultants A.T. Kearney Ltd. had been spent. The $24-million contract was supposed to have been for four years, with three optional years for extension.
The audit found no evidence of overbilling or fraud, but it put the blame on poor project control by PWGSC. It noted that it had not employed risk mitigation strategies (presumably meaning that the bureaucrats had not taken steps to ensure they weren’t overspending), and that there were weak checks and balances. A.T. Kearney had apparently been responsible for monitoring and reporting on its own activities to some degree. Furthermore, only 30% of its staff had security clearances.
The report noted that the main reason for the accelerated spending was that the government had accelerated the pace to achieve the target savings, and as a result the contractor had “shifted from consultant/advisor to very active developer and implementer of procurement transformation activities, jointly with PWGSC.” This had resulted in the consultant having to devote a higher number of senior staff on the job. According to a report in the Globe and Mail, two senior consultants with the firm billed a total of $457,000 for four months of work, which averaged to $57,000 a month each.”
The audit noted that the task activities were complex and often deferred. Individuals’ responsibilities changed and their roles were not clearly articulated.
Despite the problems, the audit found that the work done by the consultants and PWGSC during the period had wrought some improvements in the government procurement, including the creation of a comprehensive analysis of government procurement and spending trends.
PWGSC management also noted that savings of $81 million were obtained during 2005-2006 and they were on track to save $204 million in 2006-2007. One of the target measures of PWGSC’s procurement reforms was the mandatory use of standing offers.


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